3CIS under fire by the Tax Administration of Kosovo

3CIS was founded in November 2008 with majority of ownership being based on US capital. The initial specialization of the company was mobility solutions and specifically professional services targeted at the world’s mobile network operators. The company started from Kosovo, taping into the potential of the people and their desire to learn and expand their knowledge.

Now, the company which has a total turnover of $20M for a period of over five years and declared best exporter in 2011 by the Association of Exporters of Kosovo and also received an award as the #1 company among small businesses in Kosovo as determined by the Ministry of Commerce and Industry, is going through a tough period and had to lay of 20% of it’s 150 man/women workforce, because the Tax Administration of Kosovo – TAK forced the company to pay a fine of VAT plus interest of 530,000, because according to TAK, 3CIS was illegitimately served with penalties for non-payment of VAT.

3CIS responded publicly today through a press release notifying the opinion about this issue and how they had to deal with it since a couple of months now. “3CIS was put through an exhaustive financial audit of all years of operation. We welcomed this as a means to ensure we are, as we believed to be, operating fully within the tax law. All documents, records, receipts, etc. were shared openly and willingly knowing we should earn a reputation of being a well run and honest company with a high degree of integrity once the audit was completed.” continued the press release.

“In the absence of any discrepancy or obligation being found during the audit, 3CIS was illegitimately served with penalties for non-payment of VAT. When one takes into account that the activities we support are considered to be 100% exports, there are simply no grounds to charge VAT. None of 3CIS Customers are in Kosovo. Their reasoning is based on a clear misinterpretation of law.

Place of Supply is what is used to determine whether VAT is applicable or not. Place of Supply is, as commonly understood globally, the place where goods are consumed or in 3CIS case, where our Customers are (on five different continents including USA, UK, Canada, Germany, S. Africa, India, Australia, Russia, etc. all out of Country). Regardless of the fact that 3CIS has documentation from TAK that clarifies VAT is not chargeable for the services we provide, they proceeded to force us to pay VAT plus interest and threatened additional significant penalties if we do not pay in full immediately. The net effect is that our company has been impacted by an unplanned and unaffordable bill of 530,000.”

The comment continues and describes how the company appealed multiple times to TAK and had significant legal and financial consultations, but it looked like no way out was possible and the company was forced to pay.

“One part of the appeal process was supposed to be based on an independent panel reviewing the case but the panel was simply constructed with TAK employees and the decision remained the same. Despite the arguments and explanations by many professionals and institutions that stated that we were right and should not be charged, an official report issued by the tax administration stated otherwise and we reluctantly paid. Adding to the frustration, Multiple TAK representatives have told us we were right, but refused to stand up for us officially. We were told on one occasion to pay and then take them to court and we would win. This was shocking and showed clear ignorance for the real impact of allowing an unjust decision to be made” continues the press release.

“This situation has come to be understood by our company as a reality of operating in Kosovo. We are discouraged by the potential for unwarranted fines, penalties, taxes or whatever else may surface unexpectedly in the future. This does not encourage our continued investment nor will it encourage other businesses to invest in Kosovo.

In our efforts to pursue justice and ensure fair treatment, we appealed to the Tax Administration of Kosovo, the Ministry of Finance and the American Chamber of Commerce in Kosovo, to which we have been a regular member and contributor since 2009. Unfortunately, we did not gain much support from anyone and encountered a general feeling of indifference and lack of initiative to solve a problem that is much bigger than our company paying a fine. This is an issue that affects the people of Kosovo, the government, and the growth the country. It must not continue to be a challenge for companies who chose to establish a presence in Kosovo.”

You can read the full press release here, while it is worth mentioning that much of the work of 3CIS has been awarded recognition from Customers and Services Partners for successfully deploying and operating carrier class networks.

3 replies on “3CIS under fire by the Tax Administration of Kosovo”

It is a shame that the law is interpreted as officials feel fit and not by global standards and precedent. It is also a reason why my firm did not invest after we were told that a bribe is required to start the process. That to me is unacceptable and Kosovo needs to deal with corruption immediately so that investors can know that the law is fair, just and stable today, tomorrow, and going prospectively into the future.

This is your “climate that supports business growth” advertised by ThaÃ§i’s government. Now, since they are low on cash, and they have to fulfill their salary increase promises (their electoral campaign), they are punishing hard working companies.

3CIS, I recommend you leave Kosova ASAP, and go to a place that really encourages growth. Thanks to ThaÃ§i, all the qualified workforce will continue to work in coffee shops and keep Kosova on the top of the poorest countries list.

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